1. Claim Preparation and Transmission Chapter 6
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2. Key Terms Average wholesale price (AWP) Birthday rule CMS-1500
Compounding
Coordination of benefits (COB)
Dispense as written (DAW) codes Dispensing fee
Durable medical equipment (DME)
Maximum allowable cost (MAC)
Chapter 6

3. Key Terms (Continued)
National Council for Prescription Drug Programs (NCPDP) Telecommunications Standard Version 5.1 and Batch Standard 1.1
National Drug Code (NDC)
Primary insurance
Real-time claims management systems
Secondary insurance
Switch vendors
Universal Claim Form (UCF)
Usual and customary price (U&C)
Chapter 6

4. Claim Content
When a patient fills a prescription with the aid of any type of medical insurance, a claim is sent to the necessary third parties
Proper filing saves the pharmacy from unnecessary penalties and delays, and ensure that the maximum benefit is received
Most claims are now filed electronically through online claim submission, although paper claims are still sometimes used
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5. Claim Content (Cont.)
Five components must be recorded when a claim is submitted:
Patient information
Prescriber information
Pharmacy information
Insurance information
Prescription information
The correct insurance plan, codes, pricing, and fees need to be assigned
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6. Claim Content (Cont.) Patient information
Recording the correct patient information is vital to a successful claim submission
The general beginning point for filing a claim
Patient information includes:
Basic information – name, gender, address, date of birth, and phone number
Relationship to cardholder, if applicable
Pharmacy/Prescriber’s Internal Patient ID
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7. Claim Content (Cont.) Prescriber information
Correct information about the prescribing physician must be recorded on the claim
Must be verified in order for a prescription to be valid
Prescriber information includes:
Prescriber ID (NPI or DEA)
Prescriber last name
Prescriber phone number
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8. Claim Content (Cont.) Pharmacy information
Identifies the pharmacy filling a prescription
Will be consistent for every prescription the pharmacy fills for a patient
Pharmacy information includes:
Identifier (NPI), formerly known as the NABP number
Basic information – pharmacy and pharmacist name, address, and phone
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9. Claim Content (Cont.) Insurance information
For patients who have medical insurance, all the relevant information is collected and proper steps are taken to determine how to file the claim
Insurance information includes:
Cardholder ID
Group ID
Patient relationship
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10. Claim Content (Cont.) Prescription information
Vital in determining how any applicable medical insurance provider handles the claim and what benefits will be assigned
Prescription information includes:
Drug name
Drug dosage
DEA number (required for controlled medications)
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11. Coordination of Benefits
A provision that ensures that when a patient is covered under more than one policy, maximum appropriate benefits are paid, but without duplication
Some patients have more than one insurance policy
The primary plan is billed first and after adjudication, the second plan can be billed for any eligible, unreimbursed amount
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12. Determining the Primary Plan
Primary insurance is the first insurance that the patient will use for claims, while secondary insurance is used afterwards for any remaining expense
Specific facts are used to determine which plan is primary by technician specialists
A child’s primary insurance is usually determined by the birthday rule
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13. Dispense As Written (DAW) Codes
Set of NCPDP codes used to inform third parties of the reason why a brand or generic product was used to fill a prescription
Prescribers and pharmacies must prescribe and dispense the generic form of a drug whenever possible
DAW codes indicates whether or not the prescriber’s instructions regarding generic substitution were followed
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14. National Drug Codes (NDC)
All outpatient prescription drugs are billed using the drug’s NDC
Services for pharmaceuticals must be submitted using NDCs in 11-digit format
The three segments of the NDC are:
Labeler code
Product code
Package size
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15. Pricing Prescriptions
Four main methods are used to price pharmacy prescriptions in the retail setting:
Usual and customary price (U&C)
Maximum allowable cost (MAC)
Average wholesale price (AWP)
Pending AMC Price
Mathematical calculations are often required to find the appropriate price
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16. Usual and Customary Price (U&C)
Price the provider most frequently charges the general public for the same drug
Generally determined at the corporate level by providers
Computers in pharmacies are often programmed to calculate the U&C price automatically
Also known as Usual, Customary, and Reasonable Payment Structure (UCR)
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17. Maximum Allowable Cost (MAC)
The greatest unit price that the payer or PBM will pay
If the pharmacy has a contract as a network member of a health plan run by third-party payers and PBMs that covers the customer, charges for prescriptions are based on the terms of that contract
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18. Average Wholesale Price (AWP)
The AWP of a prescription drug is the average price at which a wholesaler sells drugs to pharmacies, physicians, and other consumers
The pricing information is based upon data obtained from various distributors, manufacturers, and other suppliers
Generally used as a drug pricing benchmark for payers
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19. Compounded Drugs
Procedure of creating combinations of drugs that are prepared or mixed prior to purchase is called compounding
Pricing structure is generally U&C, and fees are usually higher
Compounding may require a pharmacist to utilize medication knowledge and expertise to mix, assemble, package and label, and prepare drugs (and other components) in a specific manner
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20. Dispensing Fees Fee for a pharmacy’s professional services
Determined by several factors specific to a pharmacy, including the following components of pharmacy operating costs:
Staffing
Store operations and overhead
Prescription preparation
Assurance of proper medication use
Allowing for a reasonable profit
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21. Creating Claims
Within the pharmacy system, three claim submission options are in use:
Electronic (real-time)
Electronic (batch)
Paper
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22. Electronic Claims
In pharmacy billing, electronic claims can be adjudicated in real time or in several batches throughout the day
Real-time claims management systems enable providers to submit electronic pharmacy claims in an online real-time environment
Within seconds, a patient’s eligibility is confirmed and the provider receives a response indicating payment or denial
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23. Electronic Claims (Cont.)
In some cases, the claim is routed to a switch vendor before being sent on to the payer
Switch vendors verify that a claim conforms to NCPDP transaction standards before forwarding it to the payer’s claim system
Real-time systems perform many other functions as well
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24. National Council for Prescription Drug Programs Standards
The National Council for Prescription Drug Programs (NCPDP) Telecommunications Standard Version 5.1 and Batch Standard 1.1 is the HIPAA standard for electronic retail pharmacy drug claims
Defines the record layout for prescription claim transactions between providers and adjudicators
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25. Paper Claims
Most payers require the NCPDP universal claim form (UCF) for paper claims
A two-sided document
Requires the patient’s information and their signature
Details about the prescription are included
Paper claims are processed through the pharmacy system but do not result in real-time claim responses to the provider
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26. Drug Utilization Review (DUR)
Once a claim has been submitted, whether electronically or on paper, it is subjected to editing for drug utilization review
Process by which prescribed medications are evaluated against explicit criteria to improve the quality of drug therapy and reduce unnecessary expenditures
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27. Drug Utilization Review (Cont.)
Examples of DUR issues include:
Early refill
High or low dose
Ingredient or therapeutic duplication
Maximum duration
Drug-drug interaction
Late refill monitoring
Several other precautions
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28. Durable Medical Equipment
Another type of pharmacy billing that will occur from time to time
DME is comprised of certain medical equipment that is ordered by a doctor for use in the home
Such as walkers, wheelchairs, and hospital beds
Chapter 6